I agree with a lot of what’s in Chris Schelling’s post at Institutional Investor but particularly this paragraph:

Rather than being the result of runaway capitalism, these problems [ed.: e.g. great discrepancies in wealth and income], I believe, have been caused by its disappearance. We don’t have too much capitalism; rather, we have far too little.

Most critics contend that this failure of capitalism is, perhaps ironically, the result of unchecked corporate profit maximization. Once again I agree. However, capitalism is not axiomatically about profit maximization; it’s not about corporations. In fact, true capitalism was originally agnostic on both of those subjects. Only in modern times has profit maximization become the broadly accepted definition of this economic model.

The great enemy is the accumulation and consolidation of power whether it is in the hands of rich individuals, companies, or governments at any level. Capitalism and liberal democracy can encompass diversity and dramaticly different approaches to the pursuit of happiness. Crony capitalism (which is what we have now) and state socialism cannot.

After her inauguration on Monday, Chicago’s new mayor, Lori Lightfoot, hit the ground running. Fran Spielman reports at the Sun-Times:

Mayor Lori Lightfoot spent her first day on the job focusing on Memorial Day weekend safety, a broader plan to combat the traditional summer surge of violence and delivering a message of collaboration to a cabinet that is not her own.

“It’s definitely a brand new experience walking into the fifth floor, seeing `Office of the Mayor’ and recognizing, that’s me,” she said.

The mayor arrived at City Hall shortly after 9 a.m. to find a phalanx of television cameras waiting for her in the lobby and a few more cameras outside her fifth-floor office.

There was a good reason for the late start.

“I saw my mom and family off before they took to the airport. … I’m still kind of in the after-glow of yesterday. And it was bittersweet to see my mom go back home today,” Lightfoot said.

The mayor was asked what 90-year-old Ann Lightfoot thought of the inauguration ceremony at Wintrust Arena that turned into a love-fest for the new mayor and her message that “reform is here.”

“She was, of course, proud. But, growing up [and] living most of her life in a small town, she was pretty overwhelmed by the response yesterday and proud of her daughter for sure,” Lightfoot said.

About an hour later, Lightfoot addressed dozens of staffers, including several prominent holdovers from Mayor Rahm Emanuel’s office, before they began two hours of training on two important subjects: ethics, and complying with the Freedom of Information Act.

Former Mayor Rahm Emanuel spent eight years fighting and stalling FOIA requests tooth-and-nail. Too often, that triggered legal battles like the one that culminated in the court-ordered release of the Laquan McDonald shooting video and Emanuel’s private emails.

Lightfoot has promised to promptly honor FOIA requests from the news media and everyday Chicagoans, which would be a welcome relief.

About an hour later, it was time for her first cabinet meeting. It’s a cabinet largely dominated by Emanuel administration holdovers.

“We had six weeks to do a heckuva lot. So what we focused primarily on was building out the mayor’s office. We’ll be placing some names before the City Council next week for nomination to different departments,” she said.

Some of the more than hourlong cabinet meeting was spent getting acquainted and telling stories about “why they got into public service,” the new mayor said.

Her first official action as mayor was to promulgate an executive order to all city departments ending “aldermanic privilege”, the near-total control of aldermen over just about everything that goes on in their wards. That’s a primary source of aldermanic power and is inevitably corrupt.

It only solves half the problem. The other half is that far too much power is consolidated in City Hall. Whether cityh departments will conform to the mayor’s executive order or whether Chicagoans are just trading one set of bonds and corruption for another remains to be seen.

I’m glad that Tom Friedman is finally coming around on China. Better late than never, I suppose. His latest New York Times column has a number of reasonable passages, e.g.:

Trump’s instinct that America needs to rebalance its trade relationship with Beijing — before China gets too big to compromise — is correct. And it took a human wrecking ball like Trump to get China’s attention. But now that we have it, both countries need to recognize just how pivotal this moment is.

and

China kept insisting it was still “a poor developing country” that needed extra protection long after it had become the world’s largest manufacturer by far. Nevertheless, the relationship worked for enough U.S. companies enough of the time that the world’s biggest incumbent superpower, America, accommodated and effectively facilitated the rise of the world’s next largest superpower, China. And together they made globalization more pervasive and the world more prosperous.

And then some changes too big to ignore set in. First, China under Xi announced a “Made in China 2025” modernization plan, promising subsidies to make China’s private and state-owned companies the world leaders in supercomputing, A.I., new materials, 3-D printing, facial-recognition software, robotics, electric cars, autonomous vehicles, 5G wireless and advanced microchips.

I’m glad he mentioned “Made in China 2025”. That was the shot across the bow. Not only did it reveal that China’s predisposition to autarky had never gone away it was an example of a well-known business tactic in which you force a competitor into an unprofitable niche by cutting off his growth plan.

He continues:

As a result, all China’s subsidies, protectionism, cheating on trade rules, forced technology transfers and stealing of intellectual property since the 1970s became a much greater threat. If the U.S. and Europe allowed China to continue operating by the same formula that it had used to grow from poverty to compete for all the industries of the future, we’d be crazy. Trump is right about that.

Where he is wrong is that trade is not like war. Unlike war, it can be a win-win proposition. Alibaba, UnionPay, Baidu and Tencent and Google, Amazon, Facebook and Visa can all win at the same time — and they have been. I’m not sure Trump understands that.

But I’m not sure Xi does, either. We have to let China win fair and square where its companies are better, but it has to be ready to lose fair and square, too. Who can say how much more prosperous Google and Amazon would be today if they had been able to operate as freely in China as Alibaba and Tencent can operate in America?

and

I repeat: Trade can be win-win, but the winning shares can be distorted when one side is working hard and cheating at the same time. We could look the other way when trade was just about toys and solar panels, but when it’s about F-35s and 5G telecommunications, that’s not smart.

and especially:

In the old days, when we were just buying China’s tennis shoes and solar panels and it our soybeans and Boeings, who cared if the Chinese were Communists, Maoists, socialists — or cheats? But when Huawei is competing on the next generation of 5G telecom with Qualcomm, AT&T and Verizon — and 5G will become the new backbone of digital commerce, communication, health care, transportation and education — values matter, differences in values matters, a modicum of trust matters and the rule of law matters. This is especially true when 5G technologies and standards, once embedded in a country, become very hard to displace.

The tragic part of that is that there’s barely a scintilla of that has not been true for 30 years and it’s what perceptive and knowledgeable people have been saying all along while Tom Friedman and his ilk keep making predictions that have never come to fruition.

Welcome back to the fight. This time I know our side will win.

It’s from Gizmodo: “Game of Thrones Star Joins Board of Cryptocurrency Startup for Vegans, and No We Didn’t Just Throw Darts at a Wall Covered in Buzzwords”.

I found this piece by Ricardo Alonso-Zaldivar at the Associated Press on just how lavish the proposed “Medicare For All” plans are by comparison with the systems of other countries mildly amusing:

WASHINGTON (AP) — The “Medicare for All” plan embraced by leading 2020 Democrats appears more lavish than what other advanced countries offer, compounding the cost but also potentially broadening its popular appeal.

The plan from Vermont Sen. Bernie Sanders would charge no copays or deductibles for medical care, allowing only limited cost-sharing for some prescription drugs. It would cover long-term care at home and in community settings. Dental, vision and hearing coverage would be included.

But while other countries do guarantee coverage for all, the benefits vary significantly. Canada, often cited as a model, does not cover outpatient prescriptions and many Canadians have private insurance for medications. Many countries don’t cover long-term care. Modest copays are common.

I’ve addressed that topic in the past. The reality of many of these other countries’ plans is that in many cases copays are actually larger than they are here.

“Medicare for All proposals would leapfrog other countries in terms of essentially eliminating private insurance and out-of-pocket costs, and providing very expansive benefits,” said Larry Levitt, a health policy expert with the nonpartisan Kaiser Family Foundation. “It raises questions about how realistic the proposals are.”

I guess there are several ways of looking at what’s been put on the table. I take thre proposed plans seriously because they are the only yardsticks I have. If their proponents don’t like their being taken seriously, they should put more serious plans on the table.

It reminds me of Salena Zito’s comment about Trump’s supporters during the 2016 election. Should we take the supporters of “Medicare For All” literally, seriously, or neither? Do we need to wait until they actually hold a majority in the Congress before we know what’s being proposed?

The article does suggest what we should make of the “democratic socialists” who claim that when they say “socialism” they don’t mean Stalin they mean Sweden, which they say with a straight face, ignorant of the details of Sweden’s system.

The relatively parsimonious plans of many other countries would never garner popular support here not to mention they’d be condemned as racist, sexist, classist, or all three.

For most people the idea of an “inner child” evokes innocence, playfulness, and wonder. Not me. My inner child is more like Chucky. This story reported by NBC News brings out my inner child:

When they aren’t working or taking care of their autistic children, Melissa Eaton and Amanda Seigler are moles.

Eaton, 39, a single mother from Salisbury, North Carolina, and Seigler, 38, a mom to six in Lake Worth, Florida, have spent much of their free time in the last three years infiltrating more than a dozen private Facebook groups for parents of autistic kids. In some of these groups, members describe using dubious, dangerous methods to try to “heal” their children’s autism — a condition with no medically known cause or cure.

The parents in many of these groups, which have ranged from tens to tens of thousands of members, believe that autism is caused by a hodgepodge of phenomena, including viruses, bacteria, fungal infections, parasites, heavy metal poisoning from vaccines, general inflammation, allergies, gluten and even the moon.

The so-called treatments are equally confused. Some parents credit turpentine or their children’s own urine as the secret miracle drug for reversing autism. One of the most sought-after chemicals is chlorine dioxide — a compound that the Food and Drug Administration warns amounts to industrial bleach, and doctors say can cause permanent harm. Parents still give it to their children orally, through enemas, and in baths. Proponents of chlorine dioxide profit off these parents’ fears and hopes by selling books about the supposed “cure,” marketing the chemicals and posting how-to videos.

Anybody have a guillotine handy? I recognize that people whose kids have autism are often desperate for respite let alone a cure but to injure one’s own children administering quack cures promoted by opportunistic halfwits. I have no words.

As I’ve mentioned before my former business partner once said something I’ve come to refer to as “the reverse Voltaire”: I may agree with what you say but I will deny to the death your right to say it. Former Chicago Mayor Rahm Emanuel takes to the pages of The Atlantic with an op-ed a column (he’s been made a contributing editor). Here’s its conclusion:

Every time Democrats look at a problem, they think of a program. And while those programs often point the way forward, Democrats need to focus their energy on convincing the middle class that they share their values more than just their economic interests. There is more to voters than their wallets. To do that, Democrats need to prove to them that they know the difference between right and wrong, and that begins with owning the terms accountability and responsibility. Democrats need to be the ones demanding that those who fall short, no matter how privileged, be made to answer for their own decisions. Every one of us should have to live by the same moral and ethical codes. The nation’s elite shouldn’t have any special license to take the easy way out.

Do I really need to go through the catalogue of particulars for why Rahm Emanuel is such a bad spokesman for that particular message? He made millions selling his political contacts to the very bankers he decries in the piece. He became mayor of Chicago with no relevant prior executive experience and certainly missing the personal qualities for the job on the basis of being connected. I’m sure he thought becoming mayor of Chicago was a sinecure, a steppingstone to the presidency. Once he had the job he proceeded to do a pratfall. Just compare Chicago’s credit rating before he took office with what it was after he took office.

His major plan for Chicago was gentrification, supporting a number of progams to encourage well-heeled people to move into the city. It hasn’t been very effective. I am confident that Chicago’s population as measured by the decennial census will be a shock to many but probably not the former mayor. I could go on.

But he’s right here and I hope that Democratic politicians take heed. I presume that he’s angling for a position in the Biden campaign and in a presumptive future Democratic administration.

One word of criticism. The best example of exactly the sort of elite arrogance that we’re suffering from right now is not the war in Iraq. It’s granting China Most Favored Nation trading status and its admission to the WTO. Both occurred under Bill Clinton’s watch but we mustn’t criticize the Bubba. Dare I mention that both Joe Biden and Hillary Clinton voted in favor of the Iraq War? Claiming they didn’t realize that we would actually go to war or that they were misled doesn’t pass the smell test.

Is that the sort of taking responsibility that he means? Accountability and responsibility start at home. I’ll believe him when he takes some and those he supports start taking some.

Nouriel Roubini, dubbed “Dr. Doom” during the Aughts for his prophetic warnings of a global financial crisis, takes to the The Guardian to warn of an incipient global trade “Cold War”:

The US blames China for the current tensions. Since joining the World Trade Organization in 2001, China has reaped the benefits of the global trading and investment system, while failing to meet its obligations and free riding on its rules. According to the US, China has gained an unfair advantage through intellectual property theft, forced technology transfers, subsidies for domestic firms and other instruments of state capitalism. At the same time, its government is becoming increasingly authoritarian, transforming China into an Orwellian surveillance state.

For their part, the Chinese suspect that the US’s real goal is to prevent them from rising any further or projecting legitimate power and influence abroad. In their view, it is only reasonable that the world’s second-largest economy (by GDP) would seek to expand its presence on the world stage. And leaders would argue that their regime has improved the material welfare of 1.4 billion Chinese far more than the west’s gridlocked political systems ever could.

Regardless of which side has the stronger argument, the escalation of economic, trade, technological, and geopolitical tensions may have been inevitable. What started as a trade war now threatens to escalate into a permanent state of mutual animosity. This is reflected in the Trump administration’s national security strategy, which deems China a strategic “competitor” that should be contained on all fronts.

and

The global consequences of a Sino-American cold war would be even more severe than those of the Cold War between the US and the Soviet Union. Whereas the Soviet Union was a declining power with a failing economic model, China will soon become the world’s largest economy, and will continue to grow from there. Moreover, the US and the Soviet Union traded very little with each other, whereas China is fully integrated in the global trading and investment system, and deeply intertwined with the US, in particular.

We have been in a trade war for nearly 40 years; until recently it has been in essence a rout with the U. S. yielding the field to competitors. A response from the United States is long overdue. The decline in jobs from 1980 to 1990 reflects competition with Japan. The decline in jobs since 1990 and, in particular, since 2000 when China was admitted to the WTO reflects competition with China.

However, let’s change the story that Dr. Roubini is telling. In the United States trade has been portrayed as having practically nothing but benefits for the people of the United States. The truth is more complicated. There are winners and losers. Who has benefited from the status quo ante? In my assessment

1. The Chinese leadership
2. The Chinese people
3. American top management and other stockholders
4. Ordinary Americans

in descending order of gain.

Consider the chart at the top of this post. It illustrates the change in vehicle prices over the years. If you cruise over to the Bureau of Labor Statistics, its CPI tells essentially the same story. Whether in nominal or real terms the price of vehicles has not collapsed. The most you can say is that they’ve been pretty flat. Said another way consumers are not capturing most of the economic benefit of trade. I could go through a litany of other goods and it would tell a similar story. Consumer prices are not collapsing, they are rarely even declining. The economies of cost that are being realized through trade are not being realized by consumers.

Adding fuel to the fire the great ignored factor is that trade has risks as well as rewards as this graph illustrates:

Most of those who have lost their jobs as a result of trade or, alternatively, been rehired in jobs that paid less, have been ordinary Americans.

My proposal is that rather than considering developments through the metaphor of trade war we should be thinking in terms of risk and reward and those who are dismayed at the prospect of the United States trying to change the trend of prices that aren’t falling but wages that are by rebalancing trade need to propose alternatives to restricting trade that would have that effect. I think that Chinese mercantilism tells us that there are no such policies that won’t meet counter-moves from the Chinese but I have an open mind.

You might want to take a look at this piece by Simon Haeder at The Converation. In it he explores the history of public hospitals in the United States and the effect that Medicare and Medicaid have had on them:

The U.S. could potentially even have ended up with a British-style, government-run health care system. Yet, the country went a different route. Instead of expanding, public hospitals have been closing since the 1960s in large numbers. How come?

In my recent academic paper on the subject, I analyzed the creation and closure of public hospitals in California, the state with one of the most extensive public hospitals system in the nation. My findings indicate that when state and federal governments extended health coverage through programs like Medicaid and Medicare, all but the most well-resourced local governments in turn began closing their hospitals.

My findings bear implications for policy debates today. Advocates for any large-scale health reform effort such as Medicare-For-All should be mindful of the eventual unintended side-effects they may trigger.

That may be surprising to some but it isn’t to me. It’s completely consistent with what I’ve been saying. Federalization neuters local governments. It doesn’t expand the services available at the local level but decreases them for most people.